New AMA Study Shows High Level of Concentration In Health Insurance Markets, Encourages Regulators To “Vigorously” Scrutinize Mergers
It is not news to say that health insurance markets are typically dominated by a few big carriers. The question is not whether health insurance markets are concentrated, but instead the operative question is exactly how concentrated are they? In the 2010 edition of its Competition in Health Insurance: A Comprehensive Study of U.S. Markets released on February 1, 2011, the American Medical Association finds that 99% of health insurance markets are “highly concentrated” under Department of Justice/Federal Trade Commission merger guidelines.
According to a press release, the AMA in its report found that in 48 percent of metropolitan statistical areas, at least one insurer has a market share of 50 percent or more. In the release, AMA President Cecil B. Wilson, M.D., said “The market power of health insurers continues to prompt anti-competitive concerns among physicians. To help restore a competitive balance to health insurance markets, the AMA urges the federal and state agencies to prohibit harmful insurance company mergers and adopt policies that would level the playing field between small physician practices and large insurers.” Regulators should “vigorously examine” the anti-competitive effects on consumers and health care providers when considering the approval of health insurer mergers says the AMA. Under Florida law, the Florida Office of Insurance Regulation has only limited grounds to disapprove proposed insurance company mergers, including when the merger would “substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this state or elsewhere.” (§ 628.451(2)(c), Fla. Stat.).
According to the most recent data available on the OIR’s website (CY2009), by premium dollar, the Florida major medical marketplace is led by Blue Cross & Blue Shield of Florida, Inc. with 27.14%, followed by United Healthcare Insurance Company (15.39%), and Aetna Health, Inc. (13.66%).